After the worst third-quarter performance in four years, the U.S. stock market showed an impressive comeback to start the new quarter, trumping global growth worries. This is especially true as the S&P 500 index and Dow Jones climbed 7.1% and 6.7%, respectively, in the first few days of the final quarter of 2015.
The rally has been broad based with most of the sectors moving up on subsiding volatility and none of the issues from Q3 currently overwhelming the market. In particular, the rising oil price has fueled optimism into the battered energy sector and a rebound is noticeable in the beaten down healthcare stocks. Further, China, the major culprit of the market turmoil, is showing signs of stabilization and commodities are surging too (read: 5 Ways to Play the Oil Rebound with ETFs).
Moreover, the dismal job report for September and the latest Fed minutes suggest that cheap money flows will be in place for longer than expected. This seems good for the stocks as the near-zero rates have allowed the U.S. stock market to complete a spectacular six-year bull-run.
If these weren’t enough, the final three months have been the strongest and extremely profitable for investors, if history is any guide. Since 1995, the S&P 500 posted an average gain of 5%, representing the best quarterly return. This is especially true as seasonality drives the stock market higher during this time period given the crucial holiday shopping season and an expected Santa Claus Rally.
Though there have been winners in every corner of the space, several ETFs have easily crushed the broad market fund (SPY – ETF report) by wide margins. Below, we have highlighted five ETFs have been star performers since the start of the fourth quarter and look to offer a broad exposure across a number of sectors (see: all the Categories ETF here).
PowerShares S&P 500 High Beta Portfolio ((SPHB – ETF report))
This fund tracks the performance of 100 stocks from the S&P 500 Index with the highest realized volatility over the past 12 months. It follows the S&P 500 High Beta Index and has amassed $78.4 million in its asset base. The ETF trades in good volume of more than 132,000 shares a day and charges 0.25% in expense ratio. The product is widely spread out across each security as none of these holds more than 1.75% of total assets.
Mid caps account for 51% of the portfolio, while large caps comprise the remaining. Small caps get just 2%. From a sector look, energy takes the top spot with one-fourth share, closely followed by information technology (18.6%), industrials (16.8%) and consumer discretionary (12.9%). SPHB had a strong run this quarter, gaining near double digits.
PowerShares Russell 2000 Equal Weight Portfolio ((EQWS – ETF report))
This fund provides equal weight exposure to the small cap segment of the broad U.S. stock market. It tracks the Russell 2000 Equal Weight Index, holding 1,928 stocks in the basket with each holding less than 0.3% of assets. The product is also widely spread across a number of sectors with industrials, information technology, energy, consumer discretionary and consumer staples taking double-digit allocation each.
